Close
Login to Your Account
No Account?
+ Reply To This
Results 1 to 8 of 8
  1. #1

    My Top Three Spending Mistakes

    When I was in my early twenties, everything I wanted had a price. And, they were prices I was willing to pay. Because I didn’t understand the impact that debt would have on my “adult” life, I wasn’t concerned about taking on new debt or worried about paying off old debt. If there was something I wanted, I bought it.

    When I finally came to my senses and "discovered" how much money I owed, I was shocked. I’d been carelessly spending for years and owed tens of thousands of dollars. Below are my top three spending mistakes, followed by commentary (by me) about what I would do differently if I had to "do it all over again."

    Student loan debt. By the time I finished undergrad and grad school I owed over $30,000 in student loan debt. Believe it or not, that was a “low” debt load compared to what some of my friends owed. But $30,000 in debt is nothing to take lightly. That $30,000 took me 3 years and many many hours of part-time work (in addition to my full-time job) to pay off.

    What my 30-year-old self would say to the 18-year-old me:




    Work harder and don’t take out student loans for living expenses. Don’t “treat” yourself to dinners out, beer and new clothes unless you can pay for those items without dipping into your student loan money. Thankfully, by the time I got to grad school, I figured this out. I would have saved myself a lot of student loan debt if I’d used my student loans for tuition only and cash-flowed my living expenses with part-time jobs.

    New car. Who buys a new car when they’re 22-years-old? I did. When my used “beater” car died, I decided I that I needed a new one. Not a “new to me” beater car but a brand new Honda Civic. I convinced myself that I needed a new car and a Honda would be a good “investment”. Wrong! I paid cash for the car (smart) but used up all of my savings and emergency fund doing so (not smart).

    What my 30-year-old self would say to the 22-year-old me.
    Buy a good used car. New cars depreciate in value the moment you drive them off the lot. Take into consideration your future plans and if you’ll need a car wherever you end up after college. **Two years after I bought the car, I moved to NYC for grad school and didn’t need a car, so I ended up selling it**

    Consumer "Stuff”. Keeping up with the Joneses is so much work (and so expensive!). When I was in my twenties, I dreamed of having a designer-looking home. I browsed the Pottery Barn and Crate and Barrel catalogs and imagined how my perfect home would look. I did have the sense to realize I couldn’t afford Pottery Barn, but Home Goods was a much “cheaper” alternative. For several years, I collected housewares, appliances, linens and just about anything else that interested me.

    What my 30-year-old self would say to the 25-year-old me.
    Instead of buying stuff you don’t need, how about you pay off your debt? While I didn’t increase my debt-load buying consumer goods, I certainly didn’t help myself out spending all of the money I could have saved on luxury items. If I hadn’t purchased all of that "stuff," I could have paid off my student loans and started saving for retirement much sooner.

    The Moral of My Story
    I didn’t make horrible financial decisions in my younger years (it could have been much worse) but I certainly could have made better ones. Now that I know the dangers of debt, I avoid taking out loans, pay off my credit card balances in full each month and avoid pressure to keep up with the Joneses. I make and follow a budget each month and have stopped buying things that I can’t afford.

    Simple things really, but simple things that have made a big difference in my personal finance journey.

  2. My Top Three Spending Mistakes
  3. #2
    Registered User Junior Member
    Posts
    25
    I read through this thinking I must I wrote it in my sleep, because it basically reads exactly how I feel at age 30. You should be getting paid to speak this at freshman orientations on college campuses, but it all rings true. I bounced around colleges trying to finds something I wanted to do for the rest of my life (switching every semester for 2.5 years) before living with one of my best friends and giving up on college after getting my Applied Arts degree (2 year nothing generals transfer degree) and waiting for a muse to strike me.

    I worked at Pizza Hut with my buds as a delivery driver, walking out the door with $50+ cash every night, 6 nights a week, and basically blowing that $50 on Morgan Cokes and blackjack at the bar blocks away that we could stumble home from if we had too many drinks. Utilities were paid by my check (still got full min wage) and the rest was paid by credit card. As I stated in another post, items didn't have full value, they had a decreased monthly min payment value. Something that was $200 was actually only $15 more a month, that's like 4 deliveries, when I take over 20 a night. Well, one day I decided I hated working for the 5th manager in 5 years (and over 140 diff ex-coworkers, yes, 140, I used to make lists to see how many I could remember), I decided I wanted to quit and took a look at my finances, and realized I was over $25k in CC debt and making over $450 in min payments. And I had nothing to show for it either. My top 3 spending mistakes:

    1) Black Jack and Morgan Coke
    2) Eating out ALL the time
    3) High priced toys I never really needed (I played online games a lot and never did actually need that Bowflex or Roland Drumset that I hardly used, or a pistol I never went to the range with, etc).

    I drove an 89' Dodge Colt from 97 to 2005, free from my uncle, so I never had a car payment which allowed me to make all those CC payments, plus living with 2 roomates in a mobile home (which is pretty freakin cheap, btw, my wife and I have a newer one that is 1700 sqft and we pay only $800 between the loan and lot rent, and mobile homes in our area hold value and go up in a number of cases - we have a housing boom due to the Bakan oil patch). I bought a 2005 car in Oct of 2005, but it was a used fleet car with 14k on it already, so it was already depreciated quite a bit. Buying a NEW car is never a good idea, you're basically burning a payment through depreciation every month for a the first few years (so every month you pay $400, the car dropped in value that amount). I've read in a number of places that a 4 year old car is most the time the best bet. Also, everyone likes to think a car is a good investment, but it never is. Cars lose money, even the ones that "hold their value". That just means they lose money slower. Find one that's used, as suggested above, and pay cash, or as much cash as possible without destroying your emergency fund.

    Also touched on above, taking out more student loans than needed for tuition is a bad deal. Most the time, you probably aren't in class 8 hours a day (I do know some trade schools like that though), so you can find a part time job to bring in some money. Also, scholarships are a great thing, you should try to find as many as you can, they're free money. On top of being free and tax free, you also save on interest. My little sister-in-law had been working at Pet Smart part time while going to pre-vet school, and she was having trouble with some classes and was needing more time to study. We urged her to quit the job and get good grades to keep the scholarships because those paid her FAR more than pet grooming.

    What I'd tell my 20 year old self is: Don't use credit cards, create a budget now and start saving. A 20-something who invests a few grand a year between 20 and 30 will end up with more money at age 60 than I will investing that same amount now every year between age 30 and 60. You're either paying interest, or earning interest.

  4. #3
    Quote Originally Posted by Frov View Post
    A 20-something who invests a few grand a year between 20 and 30 will end up with more money at age 60 than I will investing that same amount now every year between age 30 and 60. You're either paying interest, or earning interest.
    This fact is worth its weight in gold.

    I am actually 25, and what amazes me is how few people my age realize that $50,000 - $100,000 invested (or wasted) can really determine how comfortably or uncomfortably you live for the rest of your life. I look at it as an amazing opportunity to set yourself up to succeed for the rest of your life. $1000 is wasted at 25 is not really $1000, it's $10,000 - potentially more depending on how far out you want to look.

  5. #4
    Quote Originally Posted by Frov View Post
    I read through this thinking I must I wrote it in my sleep, because it basically reads exactly how I feel at age 30.
    And sadly, I know we're not alone. I just hope that other people will be able to learn from and not replicate our money mistakes.

  6. #5
    Registered User Junior Member
    Posts
    25
    Quote Originally Posted by Kevin F View Post
    This fact is worth its weight in gold.

    I am actually 25, and what amazes me is how few people my age realize that $50,000 - $100,000 invested (or wasted) can really determine how comfortably or uncomfortably you live for the rest of your life. I look at it as an amazing opportunity to set yourself up to succeed for the rest of your life. $1000 is wasted at 25 is not really $1000, it's $10,000 - potentially more depending on how far out you want to look.
    I wish they would teach this in high school. A lot of people say that big gov or big corp are what's destroying the wealth of the middle class, but in reality is just that people don't bother becoming educated on how to build wealth and act on it. If everyone in school right now graduated with this knowledge, I think that you wouldn't even recognize this country in 30 years (although, I'm going to bet we won't recognize it anyways in 30 years with or without this knowledge).

  7. #6
    Registered User Enthusiast
    Posts
    64
    Student loan debt is my big spending mistake as well. I'll be paying it off for years and now I don't have money to start saving or investing.

  8. #7
    Registered User Junior Member
    Posts
    43
    I've avoided those mistakes pretty well, my big regret with spending is not starting to save earlier. I had part time jobs all throughout high school, and hardly any expenses, and yet I managed to save $0 from this time. I didn't start really focusing on saving until I was in my late 20s.

  9. #8
    Registered User Enthusiast
    Posts
    69
    Definitely consumer stuff for me. The only good part of that is I can at least sell some of it and make some money back.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •